Save 20%
On Income Protection Insurance

Policy comparisons
Major insurers compared
Instant cover available

Income Protection Comparisons

Increasing Claims Option


As an optional benefit in selecting income protection insurance, the ‘increasing claims option’ allows your monthly benefit to increase according to annual CPI increases or by a pre-determined percentage outlined in your product disclosure statement. In general this is a paid option, however recently select life insurance companies in Australia have began offering it built into their income protection policies.


How does the increasing claims option work?

If you were to go on to an income protection claim, you would be eligible to receive an annual increase in your monthly benefit after the initial 12 months. The monthly benefit will continue to increase until the earlier of:

  • The end of your benefit period, or;
  • When your disablement ends, or;
  • Your policy expiry.

Case Study: (Working Example)

As a result of an accident, Samantha was unable to work for several years. As part of her income protection insurance policy, she had decided to take out the ‘increasing claims option.’ Samantha’s initial monthly benefit was $2000 per month or $24,000 per year. With annual CPI increases of 5%, when she reached year three her monthly benefit had increased to $2315 per month, giving her an extra $3780 compared with her first year. If she had not taken out the increasing claims option her monthly benefit would remain at $2000 per month.

Why does the increasing claims option cost extra?

As the graph illustrates, the increase in the monthly benefit each year presents a greater cost to the life insurance provider. As a result, the increasing claims option is offered at an increased premium.

Who does the increasing claims option suit?

The increased claims option may suit those people whose benefit period is generally longer than two years as it takes at least 12 months for the increased monthly benefit to begin. It may also be appropriate for those people who believe they may struggle to keep paying the bills in line with cost of living increases.

Income protection insurance offers a range of policy options for you to consider. If you would like more detailed information on the range of income protection insurance benefits available to you, please contact one of our advisers on 1300 135 205.